Palko Karasz, New York Times

A law put forward by the Hungarian government would force a university founded by the Hungarian-American financier and philanthropist George Soros to shut its doors, the school’s top official said on Wednesday.

The move, according to observers, was the latest development in a crackdown on free expression and liberal values under Prime Minister Viktor Orban, who has embraced President Trump and vociferously denounced Mr. Soros, a billionaire who is a frequent target of attacks by the right-wing news media in both the United States and Europe.

The school, the Central European University, opened in Mr. Soros’s native Budapest in 1991, not long after the fall of communism and the start of Hungary’s uneven transition to democracy. The school is known as a center for research in the social sciences, with programs led by internationally prominent educators.

The university has also given a platform to dissident voices, particularly in the period since Mr. Orban, who helped popularize the term “illiberal democracy,” came to power in 2010. Proponents of illiberal democracy place majority rule over civil liberties and minority rights, and they say that financiers like Mr. Soros are part of an elite capitalist class that puts cosmopolitan values over national interests.

The university’s president and rector, Michael Ignatieff, is a human rights scholar and a former leader of the Liberal Party in Canada. In a phone interview from Budapest, he said he feared his institution was the main target of the legislation.

“We view it as discriminatory and we view it as a piece of political vandalism,” Mr. Ignatieff said. “We feel that this isn’t just about us; this is about Hungarian academic freedom in general.”

The law would mandate that the university operate a campus in the United States, which it currently does not do — a requirement that Mr. Ignatieff said would be prohibitive financially.

He said that the university, which operates as an American institution, was able to preserve its academic freedom because of that.

The government’s action raised concern within the European Commission and the Hungarian Academy of Sciences, as well as the American government.

David J. Kostelancik, the temporary chargé d’affaires at the United States Embassy in Budapest, praised the university as an “important center for freedom of education in the region.”

“The United States views with great concern the legislative amendments proposed by the Hungarian government yesterday, which would seriously challenge the functioning of the Central European University in Budapest,” a statement released on the embassy’s Facebook page said.

Mr. Soros, a Holocaust survivor, has financed many liberal causes and promoted democracy through his philanthropy, the Open Society Foundations. His right-wing critics assert that a good deal of Mr. Soros’s wealth came from financial speculation and accuse him of having an undue influence on politics in the United States and Europe.

Mr. Orban built his career as an opposition figure; as a young man, he was prominent in the activism that helped bring down communism in 1989. But he has shifted far to the right, particularly since taking power in 2010, after an earlier stint as prime minister.

In the 1990s, he and other main figures in his Fidesz political party once received grants from Mr. Soros’s foundation in Hungary. At that time, the party criticized attacks on Mr. Soros, whose organizations have sometimes faulted the government and other institutions in Hungary.

Over the last decade though, Fidesz adopted a different message, and now routinely accuses advocates for migrants, for example, of working on behalf of Mr. Soros and “international capital.”

Mr. Ignatieff said government officials had, in private conversations, criticized the university’s choices of educators, among them opposition figures.

The move against the university comes as civil society organizations that receive foreign funds, especially those affiliated with Mr. Soros, have come under increasing attack from governments in the region

These organizations, which once enjoyed promotion and protection from Washington, helped bolster societies in Central Europe as they emerged from decades of Soviet-era dictatorship. However, President Trump’s election has cast doubt on that support and has emboldened populist leaders in the region to move to crack down on what they see as organizations serving foreign political interests.

The university says it has nearly 1,800 students from more than 100 countries and 370 faculty members.

The groups have also been alarmed by a series of letters to Secretary of State Rex W. Tillerson from Republican politicians in Congress, who denounced organizations linked to Mr. Soros. One such letter, for example, said that the United States Agency for International Development had helped Soros groups “push a progressive agenda and invigorate the political left” in Macedonia.

Hungarian officials on Wednesday rejected claims that the new legislation was created to target Mr. Soros’s university.

“This is not a move against any university of any foreign country but a clarification of the law,” Laszlo Palkovics, a senior education official, said in a phone interview from Budapest. “Just because a university is affiliated with Mr. Soros, that doesn’t mean that Hungarian law does not equally apply to it.”

Mr. Palkovics said he would speak with Mr. Ignatieff and also reach out to the United States Embassy.

Mr. Orban’s tactics have been compared to the playbook of President Vladimir V. Putin’s administration in Russia. The government there has pressured nonprofit organizations that get foreign funds and essentially forced many to close. Defenders of the organizations point out that many are apolitical and work in vital areas like combating the growing H.I.V. epidemic in the country.

“The Hungarian academic sector needs specifically these international relations and inspirations to be able to further develop,” said Peter Kreko, a political analyst and visiting professor at Indiana University in Bloomington. He is involved with Political Capital, an independent research institute in Hungary that has received Soros funding.

Mr. Kreko called the proposed law “an escalation” of troubling trends. “The Hungarian government is taking ever tougher steps against civil society, higher education, the news media and other sectors,” he said. The proposal was submitted to Parliament on Tuesday and could become law by summer.

He warned it was not an isolated move, noting that Mr. Orban’s illiberal democracy is seen by some as a model in the region. “Nobody should believe that what is going on in Poland is independent of what goes on in Hungary,” he said.

Mr. Ignatieff said that the embassy’s statement was proof that Hungary’s move did not go unnoticed.

“If the government of Hungary was gambling that the Trump administration would say nothing about a flagrant discriminatory attack on an American institution, they judged wrong,” Mr. Ignatieff said.

“In an era of post-truth politics,” he said, “institutions that devote themselves to telling people that there is such a thing as knowledge, and it’s the only reliable basis upon which to make public choice, that’s pretty important.”